‘Water public ownership not a customer service solution’

Nationalisation is not a “panacea” for improved customer satisfaction, the chief executive of the Consumer Council for Water (CCWater) has warned.

Delivering a keynote presentation at Westminster Forum’s ‘Future prospects for the water market and development towards PR19’ seminar which took place in London last week, Tony Smith, said: “We’ve tracked customers using other sectors including local authorities and their view of satisfaction and value for money is pretty low, so it’s not a panacea.”

He also cast doubt over the likelihood that water customers will switch suppliers in large numbers if given the option.

He said it is “not clear” that customers will view it as worthwhile to switch for savings, which are only likely to be a maximum of £40 per annum.

“In energy we know many customers will not switch for that,” he said, adding that the effectiveness of regulator Ofgem’s remedies to encourage switching in the energy sector should be given time to work before contemplating such a move in water.

If these remedies result in a “more buoyant market” then a similar shake-up should be considered in the water industry, Smith said.

Steve Robertson, chief executive of Thames Water, used his speech at the event to defend foreign ownership in the water industry.

He said many of Thames Water’s foreign owners are pension funds, including its biggest shareholder, which is the Canadian local government workers retirement scheme OMERS.

“They are looking for long-dated returns and they are looking for an ethical business.

“You have to look at the quality of the investors not where they happen to come from.”

Dr Sebastian Catovsky, deputy director of water services at the Department of Environment, Food and Rural Affairs, defended the privatised ownership of the UK water industry, which he said had delivered benefits including a “significant increase” in investment, improved services and better quality environmental standards.

But he said that while the industry recorded relatively high levels of customer satisfaction, its use of offshore tax structure is “not very transparent” for customers.

Catovsky said environment secretary of state Michael Gove’s pressure on the issue had been “the wake-up call that the sector needed.”

“Even before the Ofwat process has concluded we are starting to see quite a lot of change in the sector.”

He also said a draft of a national policy statement for water, designed to streamline the delivery of new infrastructure, “should be ready later this year”.